Qualcomm hoping to feast on Snapdragon

SNAPDRAGON HIGHLIGHTS

• Qualcomm introduced the Snapdragon application processor at the end of 2008. It brings low power use but computer-like processing capabilities to smart phones.

• The first smart phone using Snapdragon was Toshiba’s in early 2009.

• Qualcomm has unveiled its next generation of Snapdragon chips, with a more powerful dual-core processor.

• Snapdragon chips run on smart phones including Google’s Nexus One and the HTC Droid Incredible, as well as Lenovo Skylight smart books and the Dell Streak tablets.

• Qualcomm said 20 devices on store shelves worldwide today are powered by Snapdragon, and an additional 120 gadgets are being designed by manufacturers.

Qualcomm has gotten off to a fast start this year with its new Snapdragon processor, getting the powerful chip into 20 smart phones, smart books and tablets on the market today, with an additional 120 devices in the pipeline worldwide.

Now the San Diego wireless chip giant is hoping that one or more of these devices becomes a blockbuster hit with consumers.

That’s a big question, in part because none of these smart phones or tablets are made by Apple. The gadget that has been a runaway hit, Apple’s iPad, does not use Qualcomm’s chip. Apple designed its own applications processor for the iPad — 2 million of which have sold in two months.

Still, Qualcomm has high hopes for Snapdragon. The processor is the brains under the plastic and glass of Google’s Nexus One, the HTC Incredible, Sprint’s EVO 4G and the Dell Streak tablet, among others. It delivers the processing power of laptop computers of five years ago without draining the battery every couple of hours.

The company’s strength is radios for mobile devices, but it’s been working for years to expand its chip offerings. Now it makes several kinds of chips in addition to radios, from graphics to GPS circuits to Bluetooth.

Snapdragon is the company’s foray into processor chips, which are one of the important pieces of silicon as phones become more like computers and as new devices like tablets gain in popularity.

“I think we have a stronger brand than anybody” in the smart phone processor market, Qualcomm Chief Executive Paul Jacobs said at a recent investor conference. “It’s kind of funny to hear Qualcomm talking about a brand, but we seem to have a pretty good brand in the space.”

Even with its recent success, Snapdragon remains a small part of Qualcomm’s overall chip business, partly because the Nexus One wasn’t a breakout hit, and it’s too early to say whether other Snapdragon-based devices will be.

Qualcomm thinks the growth in smart phones opens the door for Snapdragon. Analysts estimate that smart phones made up just 17 percent of cell phones sold worldwide in 2009, but that is forecast to jump to 38 percent by 2014.

“We’re pleased with the market traction we’re seeing” with Snapdragon, Bill Davidson, Qualcomm’s senior vice president of global marketing and investor relations, said at a conference. “I feel now with 140 designs, your odds of having some hits in there to drive significant volume go up.”

Snapdragon faces tough competition in smart phones from Samsung, which makes the iPhone processor, and Marvell, which makes processors for BlackBerry devices. Texas Instruments also makes processors used in several mobile devices.

And as Qualcomm pushes Snapdragon into more computer-like tablets and smart books, it probably will end up competing against computer processor giant Intel.

Qualcomm has begun delivering its first dual-core, 1.2-gigahertz Snapdragon processors to manufacturers for testing, and it plans to boost performance to 1.5 gigahertz soon.

“Qualcomm is getting a lot more ink with Snapdragon than, say, Texas Instruments is with their (processor), which are shipping in more than a half-dozen cell phones in great quantity,” said Will Strauss of Forward Concepts, an industry research firm in Phoenix.

Qualcomm is attempting to move up by combining more functions into its Snapdragon chips, such as graphics and radios, so that phone makers can make smaller and less expensive devices, said Luis Pineda, a senior vice president for Qualcomm’s chip business.

Analysts expect Snapdragon eventually will put Qualcomm on a collision course with Intel — the pioneer of creating a brand for microprocessors with Pentium and later Atom.

For now, Snapdragon has mostly been used in smart phones. It hasn’t cracked Intel’s stronghold in netbooks, most of which run on the Atom processor.

Intel also hasn’t muscled its way into the smart phone market, although analysts say it’s trying with a new generation of Atom-based processors called Medfield.

“We’ll see what happens next year with Medfield, whether it will make any dent in this market, because Medfield does support Android,” said Ken Dulaney, an analyst with technology research firm Gartner.

Qualcomm has been betting that smart books or tablets will take off, paving the way for Snapdragon in more computer-like devices.

The Dell Streak tablet and Hewlett-Packard’s Airlife 100 smart book are among the non-smart phone devices using Snapdragon.

Analysts remain skeptical about the viability of the overall tablet and smart book market.

“I think all these me-too tablets will have issues by the fourth quarter because the only tablet that is selling right now is the iPad,” said Vijay Rakish, an analyst with Sterne Agee in Dallas. “Most of the other tablets probably won’t go anywhere.”

Jacobs isn’t so sure. He thinks there will be a lot of designs for devices that are essentially smart phones inside, from tablets to laptop-like clam shells.

“We’ll see how much the phone space actually migrates up to the PC space,” he said at the recent conference. “Because that’s the trend I think is more likely to happen” than computer processors migrating down to cell phones.